Tesla Inc. should be able to grow its sales by more than 20% next year, CEO Elon Musk told investors Oct. 23, as the company begins to roll out cheaper models.
“With our lower-cost vehicles, with the advent of autonomy, something like a 20% to 30% growth next year is my best guess,” Musk said on a conference call to discuss Tesla’s third-quarter results, adding that he was taking “a bit of a risk” in putting out that forecast.
One key to that growth expectation will be new cars with lower price points, which Musk and his team said remain on track to start production in the first half of next year. Tesla’s next generation of vehicles, they added, will be made on the same factory lines as current models to let the company better manage its capital spending. New manufacturing lines that Musk had at one point envisioned for late 2025 will have to wait as the company’s capex focuses increasingly on autonomy.
Austin-based Tesla delivered nearly 463,000 vehicles in the third quarter, an increase of 4% from Q2 and 6% from 2023’s Q3. Automotive revenue climbed only 2%, however, to $20.0 billion while total sales, helped by a year-over-year jump in energy generation and storage business, rose 8% to nearly $25.2 billion.
On the margin side of things, the layoffs Tesla pushed through earlier this year showed up in operating costs falling 6% year over year to nearly $2.3 billion, with the company’s cost of goods sold per vehicle falling to about $35,100. That pushed the company’s operating margin to 10.8% from 6.3% in the second quarter and 7.6% in the third quarter of last year.
CFO Vaibhav Taneja said investors shouldn’t expect that trend to hold, however. Pricing pressure and a general softness in auto sales will be headwinds.
“We are focused on the cost per vehicle and there are numerous work streams within the company to squeeze that cost without compromising on customer experience,” Taneja said.
Among the other items of note from Tesla’s earnings report and conference call:
- The company produced its 7 millionth vehicle earlier this week
- Musk said he is aiming for volume production of the Cybercab, which he unveiled earlier this month, in 2026. An intermediate goal for that product, he added, is at least 2 million units annually.
- Work on the Semi heavy-duty truck is moving ahead in Reno, Nevada. Vice President of Vehicle Engineering Lars Moravy said “all major capital expenditures” for that program have been released and teams are aiming to start building pilot models in the second half of next year with full production envisioned for early 2026.
Investors liked the look of Tesla’s report and executives’ outlook: Shares of the company (Ticker: TSLA) popped more than 10% after hours Oct. 23 and built on those gains the following morning. At about 11 a.m. Eastern, they were changing hands around $250, up 17% on the day. The move pushed Tesla’s market capitalization back to nearly $800 billion.
